S\peaking at a panel on the challenges regarding international economic integration, WTO Deputy Director-General Johanna Hill emphasized that including more regions and communities in supply chains could boost global resilience and promote inclusive growth.
She also underscored the role a strong rules-based multilateral trading system can play in this process.
DDG Hill was participating in the Global Trade and Supply Chain Summit, taking place in Dubai on 8 and 9 October.
DDG Hill noted that current supply chain shifts are driven by risk management, cost factors and emerging technologies. Recent crises — including the COVID-19 pandemic, geopolitical tensions and extreme weather — have exposed vulnerabilities in traditional supply chains.
In response, many businesses are diversifying suppliers, shifting to “just-in-case” strategies and some are strengthening their local sourcing.
Also driving shifts in supply chains are rising labour costs in major manufacturing countries and technological advances, DDG Hill noted. An example is artificial intelligence, which can enable less skilled workers to contribute to complex production processes, potentially altering comparative advantages across countries.
Speaking about economic fragmentation, DDG Hill stressed that, according to WTO studies, splitting global trade into isolated blocs along geopolitical lines could reduce long-term global GDP by around 5 per cent.
“And this is only the tip of an iceberg, as additional losses would come from reduced economies of scale, transition losses and financial distress, as well as fragmentation of data flows,” she said.
DDG Hill argued that economic fragmentation is not inevitable. Instead “re-globalization” — whereby economies and regions previously excluded from globalization are integrated into global supply chains — offers a pathway for equitable growth.
Countries like Mexico, Viet Nam, Cambodia, Romania, Costa Rica, Türkiye and Morocco have benefited from expanding global-value chain participation, she said. She also pointed out that the share of supply chain trade in global trade rose from 44 per cent in 2020 to 49 per cent in 2022.
